2016 (6) TMI 568 - AT - Central Excise

Clandestine clearance of receipt of raw materials - Held that - There is no allegation of any mischief in the shape of clandestine clearance of receipt of raw materials. As find that the case of the appellant is squarely covered by the decision of the Hon ble Supreme Court in case of Maruti Udyog (2015 (8) TMI 493 - SUPREME COURT ). The only difference is that in case of Maruti Suzuki, value of excess found was greater than the value of shortages, whereas in the instant case the value of shortages is higher than the value of excess. In so far as the value of shortages ranging from 0.01% to 0.21% whereas the excess ranging from 0.01% to 0.08% of the total procurement of parts. As find that the Tribunal in its decision in case of Maruti Udyog Ltd. (2004 (6) TMI 155 - CESTAT, NEW DELHI ) has not relied on quantum of shortages are excess, but has relied solely on minuscule percentage of shortages found. The Hon ble Supreme Court also has relied on the percentage of shortages found. However, as an additional argument, the Hon ble Supreme Court has observed that the fact that shortages of input was less than the excess of input found demonstrate the bona fide. In view of the above, find that the issue is squarely covered by the decision of the Hon ble Supreme Court in case of Maruti Suzuki India Ltd. (supra). The impugned order is set aside and appeal is accordingly allowed.

Issues:
1. Variance in inventory manufactured by the appellant.
2. Demand show-cause notices for reversal of duty credit.
3. Applicability of decision in Maruti Udyog Ltd. case.
4. Comparison of shortages and excesses found.
5. Interpretation of percentage of shortages and excesses.
6. Bona fide nature of discrepancies in accounting.

Analysis:
1. The case involved M/s Tata Motors Ltd. facing demand show-cause notices due to discrepancies in their inventory. Shortages and excesses were observed during scrutiny, leading to the reversal of duty credit sought by the authorities.

2. The appellant argued that the discrepancies were minimal, ranging from 0.01% to 0.21%, and were a result of human errors in a complex accounting system. Reference was made to the decision in Maruti Udyog Ltd. case, upheld by the Supreme Court, to support their stance.

3. The Assistant Commissioner contended that the Maruti Udyog Ltd. case was not directly applicable as the nature of shortages and excesses differed in the present scenario.

4. The Tribunal, in its analysis, emphasized the sophisticated accounting system of the appellant and the absence of any indication of malpractice. Citing the Maruti Udyog case and the Supreme Court's affirmation, the Tribunal highlighted the insignificance of the discrepancies in relation to the total procurement of parts.

5. The Tribunal noted that while the value of shortages exceeded that of excesses in this case, the percentage of shortages (0.01% to 0.21%) and excesses (0.01% to 0.08%) was crucial. Both the Tribunal and the Supreme Court focused on the minuscule percentages of discrepancies to determine the reasonableness of the demand.

6. Ultimately, the Tribunal found the appellant's situation aligned with the Maruti Udyog case principles, emphasizing the bona fide nature of discrepancies and the absence of clandestine activities. Relying on the Supreme Court's decision, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.

This detailed analysis showcases the thorough examination of the issues involved in the judgment, highlighting the legal arguments, precedents, and conclusions drawn by the Tribunal based on the facts presented and the applicable legal principles.

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